10-QPeriod: Q2 FY2012

Marathon Petroleum Corp Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 8, 2012For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) reported solid financial performance for the second quarter and first six months of 2012, demonstrating resilience in its core refining and marketing operations. Net income increased slightly year-over-year, with diluted earnings per share showing a positive trend. The company's Refining & Marketing segment was a key driver of this performance, benefiting from improved crack spreads and wider differentials between WTI and other crude oils. MPC also made significant strides in its strategic growth initiatives, including acquisitions in its Speedway convenience store segment and progress on the Detroit refinery heavy oil upgrading and expansion project, which is nearing completion. Furthermore, the company initiated a substantial share repurchase program, returning capital to shareholders. While the company faces ongoing market volatility and operational considerations, its diversified business model and strategic execution position it to navigate the evolving energy landscape.

Financial Highlights

48 data points
Beta

Revenue

$20.24B

Net Income

$814.00M

4.0% Net Margin

EPS (Diluted)

$1.19

Total Assets

$24.68B

Cash & Equivalents

$1.90B

Free Cash Flow

-$57.00M

Financial Statements
Beta
Revenue$20.24B
SG&A Expenses$365.00M
Operating Expenses$18.95B
Operating Income$1.31B
Interest Expense$47.00M
Net Income$814.00M
EPS (Basic)$1.20
EPS (Diluted)$1.19
Shares Outstanding (Basic)680.00M
Shares Outstanding (Diluted)682.00M

Key Highlights

  • 1Net income for the six months ended June 30, 2012, increased to $1.41 billion from $1.33 billion in the prior year period.
  • 2Diluted earnings per share for the six months ended June 30, 2012, were $4.07, up from $3.72 in the comparable period of 2011.
  • 3The Refining & Marketing segment's income from operations increased significantly, driven by wider crack spreads and favorable crude oil price differentials.
  • 4Speedway segment income from operations also showed improvement due to higher merchandise and gasoline/distillates gross margins.
  • 5MPC announced and began executing a $2.0 billion share repurchase program, repurchasing approximately $850 million through an accelerated share repurchase (ASR) program.
  • 6The Detroit refinery heavy oil upgrading and expansion project was approximately 96% complete as of June 30, 2012, on budget and on schedule for Q3 2012 completion.
  • 7The company's Pipeline Transportation segment experienced a slight decrease in income from operations due to reduced shipment volumes.

Frequently Asked Questions

The primary driver was the Refining & Marketing segment, which benefited from improved Refining & Marketing gross margins, largely due to wider Chicago and USGC LLS 6-3-2-1 blended crack spreads and favorable differentials between WTI and other light sweet crudes. The Speedway segment also contributed positively due to increased merchandise and gasoline/distillates gross margins.

MPC announced a $2.0 billion share repurchase program, of which $850 million was executed through an Accelerated Share Repurchase (ASR) program during the first six months of 2012. The company also declared a dividend of $0.35 per share in July 2012, payable in September.

The Detroit refinery heavy oil upgrading and expansion project was approximately 96% complete as of June 30, 2012. It was on budget and on schedule for construction completion in the third quarter of 2012, with the expanded refinery anticipated to be online by year-end 2012 after a turnaround period.

The Spinoff was completed on June 30, 2011. Prior to this date, the financial statements included allocations of general corporate expenses from Marathon Oil. Subsequent to the Spinoff, MPC operates as an independent entity, and financial reporting reflects consolidated MPC activities. A transition services agreement with Marathon Oil for administrative services terminated on June 30, 2012.